The Historical Precursor to DOGE

Chris dives into the surprising historical parallels between today’s budget challenges and the post-WWI crisis era, citing Amity Shlaes’ compelling research. He explores Warren G. Harding’s “Doge prototype” reforms under the Budget and Accounting Act of 1921, highlighting how tough measures, budget czars, and fiscal discipline led to federal surpluses under Presidents Harding and Coolidge. Can this approach work again today? www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast, explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
The historical precursor to Doge. Oh yeah, the doge has
been tried in the past, and it worked again. I
gotta give I got to give a shout out to
Amity Shales. I actually cited her work last week here
on the program. But she get you put together in

(00:38):
an unbelievable piece talking about doge and where it came from. Again,
there was there was a Doge back in nineteen twenty one.
That's right. Warren G. Harding was a Doge proto type.

(01:00):
So we had all sorts of issues. They called it
am We called it the crisis culture of the late
nineteen tens in early nineteen twenties, and as she said,
it had some similarities to our current climate, current atmosphere
here in the United States. A country was reeling from

(01:23):
federal debt that was accumulated during World War One. Veterans
coming home from Europe couldn't find jobs. We had the
nineteen eighteen nineteen nineteen influenza pandemic. Federal bureaucrats, because of
the war, grew very, very comfortable in their positions with
the power that they had, the budgets that they had,

(01:45):
and they weren't willing to really relinquish those powers, surrender
those powers. So Harding and Congress responded with what was
called the Budget and Accounting Act of nineteen twenty one. Now,
this required the President to submit an annual budget request

(02:06):
to lawmakers. The law actually established a general Accounting Office
to audit government spending and provided to the executive a
research arm, which was the Bureau of the Budget. Like DOGE,
the Budget Bureau didn't have any statutory power over executive departments.

(02:26):
Its mission was limited to pressing departments to curtail spending
and to furnish the Bureau information as the Bureau may
from time to time require. Now this is called by
herding the business organization of government. Again, the credential likeliest
to intimidate the bureaucratic heart in those postwar days wasn't

(02:50):
the billionaire entrepreneur, but was actually a general. The first
Budget Director was Brigader General Charles Dawes, who headed the
supply procurement for the our forces in World War One
in France, so twice a year the budget Director summoned
employees of federal departments to sessions at which they were,

(03:12):
according to newspaper descriptions, cajoled and threatened in the presence
of the President himself. The meetings there DAWs the first meeting,
Dawes left off the stage to get mentally closer to
his six hundred man audience. The General Order Department heads

(03:33):
to their feet. Turning to the president, he impressed troops
standing behind him that they swore they would win the
war on waste. After Harding died in twenty three, Coolidge
and Dawes success Sir Brigadier General Herbert Mayhew Lord became
the chief boosters. They actually performed backed by a band.

(03:56):
They put these things together with more than one thousand
civil servants. No budget line was too small to avoid
a prod from federal budgeteers. And again to go through
these little things. I mean, like I said, every little
thing they took a look into. Then again the newspapers

(04:17):
at the time, oh this is Tzaris control and the
oh no, they shouldn't be doing this. But it worked.
The budget czars, if you want to call them. They
prevailed federal surpluses. That was a rule that happened all

(04:38):
the time. And then you had Coolidge doing his part
by vetoing spending bill after spending bill. He also didn't hesitate,
according to Sales, to shame big spending departments. Overspending was characteristic,
he said, of undeveloped or decadent people. The nineteen twenty

(05:02):
one law also gave the president the ability to impound
cash already appropriated a line item veto in real time. Liz,
when Coolidge left the presidency in nineteen twenty nine, the
federal budget was lower than it was when he took office.
I know that sounds impossible, but it happened. It happened,

(05:29):
So okay, doge, if done properly, can work. Yes, okay,
I know we're constantly told that's impossible. It can happen.
It's happened before. It's happened before. It's just whether or not.
You know, we're going to have the will watchdog. On

(05:52):
Wall Street dot Com,